E-Malt.com News article: China: AB InBev takes back distribution control of Corona Extra

Anheuser-Busch InBev (AB InBev) took back distribution control of Corona Extra from Carlsberg in China as CEO Carlos Brito insists the brand will extend its ‘super premium’ position in the country, Beverage-Daily.com reported on August 1.

AB InBev reported its Q2 2014 results on July 31 with total revenue up 5% to $12.2 bln and EBIT up 10.5% to $4.054 bln*, while normalized net profit grew 74% in the quarter to $2.614 bln.

The Corona family (Corona Extra and Corona Light) grew 5.3%, and AB InBev CEO Carlos Brito said the world’s largest brewer is progressively regaining control of the brand globally following its full takeover of Mexico’s Grupo Modelo in June 2013 – and taking it into new territories.

In Canada AB InBev regained the right to import, promote and sell the brand in March, recently took back control of Corona from Chilean brewer and soft drinks player CCU in Argentina and is poised to regain control in the UK from Molson Coors, where Brito is eyeing a “big market”, in January 2015.

“And in Brazil, it’s white territory for the brand. We’re going to launch it before the end of this year,” Brito said, adding that AB InBev was aiming to take Corona up to Budweiser’s level on the world stage.

But Brito enthused most about the potential for Corona in China, and said an economic slowdown in recent months had hit local value brands – not AB InBev’s ‘national core’ and premium brands such as Harbin and Budweiser.

“I’m pleased to say that we have reached an agreement with Carlsberg to take back the Corona brand in China as of tomorrow, and are looking forward to including it in our premium brand portfolio. So this is very exciting for our business in China,” he said.

Andrea Pistacchi from Citigroup wondered whether AB InBev didn’t risk cannibalizing some of Budweiser’s “incredible success” in China. How did AB InBev plan to position the brand?

Brito said AB InBev was already the premium leader in China but wanted to extend its lead using Budweiser, Corona and the ‘Belgium Trio’ of Stella Artois, Hoegaarden and Leffe.

“Corona is going to be positioned and priced above Budweiser to continue to extend the definition of super-premium in China,” he said. Bud is super premium, Corona will be “super-super premium”.

Corona would give access to sales channels where Budweiser struggles, Brito said, as a better fit in the Western-style bars popping-up in Chinese cities.

“We’re very excited about it, but we’re going to do it in a gradual way, like you have to with any super-premium brand,” he added. “It’s not going to be any big bang.”

“But it’s great to have the brand back in the biggest market in the world and in a market where we lead in the premium segment, which is really where the profits are and the growth is,” he added.

Addressing AB InBev’s Chinese strategy – EBITDA rose almost 66% in Q2 as revenue grew (due to better logistics, for instance, via more localized breweries) and better product mix – Brito said the brewer had been trading up since 2009 with Budweiser and Harbin both increasingly vital to sales mix.

*Revenue and EBIT figures reflect AB InBev’s reporting of Q2 2013 results in July 31 earnings announcement, as if Grupo Modelo’s had been incorporated from June 4 2012, rather than June 4 2013 when the merger happened – to help us understand the brewer’s underlying performance.


01 August, 2014